By INDERIA SAUNDERS

Guardian Business Desk

Inderia@nasguard.com

Inflation in The Bahamas appears to have grown faster than even top international analysts expected with a recent Central Bank report upgrading the rate to nearly three percent — more than 60 basis points above IMF projections.

The new rating means the earlier 2.4 percent predicted by the International Monetary Fund failed to predict the steep rise prices across the board Bahamians are now grappling with.

The bank's report, indeed, comes as all facets of the economy struggle with hikes in the cost of living with stagnant wages.

"The rapid fuel cost increases also underlie the firming in the Retail Price Index for the 12-month period ending June 2008, by 2.99 percent, approximately 0.57 percentage points higher than the previous year's expansion," a statement on the Bank's web site confirmed.

It could mean even further growth in that number as the year continues and the effects of the present slowdown in the economy is fully felt.

To date, the Bank reports that most significant cost gains were recorded for furniture and household operation at 7.10 percent, medical and health care at 4.73 percent, food and beverages at 4.03 percent, transport and communication at 3.21 percent and other goods and services, totaling 3.07 percent.

"The remaining index components reflected cost appreciations of less than three percent," read the bank's report.

However, The Bahamas is not alone in this growth. Research points to renewed inflation pressures — across Eastern and Western Europe, with slow economic growth and relatively high unemployment troubling Europeans from the UK to Poland.

In The Bahamas, the news of more price growth may not come as a surprise to many, with locals now complaining about increases in the cost of living. It also accompanies higher unemployment numbers as well as a reduced Gross Domestic Product growth projection.

Furthermore, it follows a falloff in Foreign Direct Investment, a major contributor to this nation's economy.

The UN's preliminary analysis of the Bahamian first three quarters and its extrapolation pegged the total investment falloff at 18 percent, a change of $126 million from 2006 to 2007. Those findings gave The Bahamas one of the biggest FDI drop-offs in the region.

However, the bank took issue with the report, asserting that the drop was instead just under two percent.

While investment gains continue to appear elusive, there may be hope yet for consumers hoping for prices more in line with their incomes.

Gas price drops in the last two weeks are now starting to make their way to The Bahamas. Those savings may also translate into lower food and utility bills, considering the fact oil prices have played in price hikes there.